What are the Two Most Dangerous Assumptions in Fundraising?

By Charlie Hulme
On July 11, 2016 At 2:00 pm

Category : Best posts Q3 2016, communication, Latest posts, strategy

Responses : 2 Comments

  • Thinking the reasons why people give doesn’t matter       the thinker
  • Thinking we know why people give

Assumption #1 is beyond redemption (you can’t fix stupid!) Thankfully although it still pervades a few of the bigger, aggressive, fundraising departments, it’s largely on its way out.

But the second is even more presumptuous. Its heart’s in the right place, but its brain isn’t.

How can any fundraising strategy be labelled ‘donor-centric’ if it is oblivious to the identity, experience and preference of the people it targets? How can it be called ‘engaging’, or ‘loving’ if, like mindset #1, it treats all donors exactly the same?

Assuming these don’t matter, or assuming we already know them, has reduced fundraising to well-intentioned spamming.Spam

Because regardless of whether we believe assumption #1 or #2, both run on a broken economic engine; volume. If it worked we’d simply jump from, say, 20 communications a year to 40, 80, 160 etc. But we know the reality is massive diminishing returns. Costs continue to rise, yields to fall.

Clearly we need a better economic engine or our beneficiaries will be left stranded by the wayside. So what is it?

Identifying and building a ‘journey’ based on donor identity, experience and preference.

Identity

We all have multiple identities – we are parents, vegans, cancer survivors etc. At any given moment, the most prominent identity determines our behaviour.

Most communications make a superficial, oftentimes insensitive, attempt to trigger this. Donors are generically labelled ‘generous’ or ‘kind’ to elicit giving behaviour. But the single most important identity – the one that made someone donate to your specific charity – is unknown, and so inactive.

There is a science to uncovering, and activating, donor identity. And it goes way beyond the easy answers being peddled round our sector. Those of you attending Ask Directs summer school will hear Dr. Koutmeridou PhD talk about her revolutionary work in this area. Summer school logo

Experience

At its most simplistic let’s say you could segment based on an identity tied to either having, or not having, a connection to the cause, i.e. cancer survivor or not. Does the fact these two groups have the same life experience mean they are having the same experience of interacting with you? Of course not.

But, because we’re oblivious to both identity and experience, every day we have the farcical, wasteful and harmful situation where someone with strong identity but a poor experience is treated identically as the person with weak identity and a great experience.

 So your opportunity to fix a broken experience or scale a good one is forever lost. Along with your chance of ever building ‘relationship’.

Preference

Even if you knew with certainty the ‘who’ and ‘why’ of identity it still wouldn’t tell you the ‘what’; what do they want from us?

For example, do all donors who are parents of a child with learning disabilities also want to campaign? Do all dog lovers want to receive the magazine? Do all donors who’ve had, or know someone who’s had, cataracts want the annual report? Do donors who’ve worked in healthcare want to hear from you by post or email? And how often?

For all the talk of ‘loving’ and ‘engaging’ with donors, no one spouting this empty rhetoric has answers to these questions. Because they don’t ask them. empty rhetoric

Instead they presume to answer on behalf of their donors. Ostensibly in the name of delivering the ‘putting the donor at the center’. In reality because the limitations of their systems, process, resource etc. don’t allow them to (which, in almost all cases, is nothing more than limitation of imagination).

And even if they ever  did muster enough humility to actually ask donors what mattered to them, what drove value for them, they would be oblivious to the science of asking properly.

Better model = much better results

Charities whose strategy is grounded in understanding why people give and why they stop have created a new revenue engine; a new financial model for raising money. Not only are they all raising far more money without asking for more, in most cases they’re asking much less.

It’s not a dangerous assumption that these are the charities that will do what we will all exist to do; make a difference.

Share Button
Charlie Hulme (26 blogs on 101fundraising)

Charlie is MD of Donor Voice. He helps charities uncover what, of all the things they do, cause relationship strength and what is harmful. Partners see a massive improvement in performance, value and retention. Voted top speaker at the Institute of Fundraising's National Convention in 2013, he writes frequently for SOFII, 101 Fundraising, the Institute of Fundraising and many others.


Add your comment

XHTML : You may use these tags : <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>



Comments

  1. Good stuff and looking forward to Dublin Summer School.

    Interesting what you say about increasing volume of Comms.

    You mentioned 20,40, 80, 160. I’ve never seen programs beyond about 30 (but have heard of them).

    But from long term tests I have seen more Comms (including and dominated by asking) = more revenue AND increased life time value.

    The problem is that the whilst each ask increases total revenue from the database, you get a lower increase per ask, but the increase in cost is linear.

    So going from 2 asks to 4 may well double revenue and costs. But from 20 to 40 would double costs but maybe only increase revenue by 50% – possibly not enough to cover the costs.

    Asking donors how many times they would like to be asked gets very low responses (maybe 1-4). At first it looks like response rates go up (per appeal they will) but a look at average number of gifts per year shows a decline. In other words the RF of RFV/RFM (recency frequency value) goes down. Which leads to lower life time value.

    I know that is simplistic but I think we need to be careful about equating donor care / listening to donors / stewardship with reduction of communications.

    Indeed, in our benchmarking study here in Australia we see that charities who mail or ask most often, also have the better life time value donors. But they also tend to take stewardship more seriously.

    Basically, a well constructed beneficiary focused program using donor centric communications and hyper-personalisation can communicate very frequently with donors will do better than one with any of those elements missing.

     — Reply
    • Thanks Sean – the point about 20, 40, 60 comms etc. was intended as a farce to illustrate the limitations of volume as an economic engine. No one (no one sane at least) would argue for jumping from say 20 to 40 or 60 comms in a year, no matter how ‘donor-centric’ they presumed them to be, for exactly the reasons you give.

      Turning ‘donor-centric’ from an empty platitude to a reality doesn’t automatically equate to a reduction in volume (though it may become a donor led by-product). It means being able to deliver on the points you make about ‘donor centric communications’ and ‘hyper-personalisation’ – two things that are impossible to do if I know nothing about the identity, preference and experience of the person I’m writing to/emailing/phoning/texting etc.

      As a separate but related aside it’s worth checking out this paper on ‘Ask Less Make More’ which turns the whole volume school of thought on it’s head. One example cites a charity who ran a test and control where one group had an arbitrary reduction of 60% less ‘stuff’ sent to them. At the end of year one both groups were worth the same, at the end of year two the ‘less’ group saw a 20% net improvement.

      http://www.slideshare.net/kschulman14/donor-voice-ask-less-make-morewhite-paper-final

       — Reply